7 Advantages of Offering Paid Time Off

by GoCo - 19 June 2017 - Benefits, Compliance, Culture

Many organizations provide paid time off benefits for their employees.

Getting a paid for not working is a great benefit.

Just ask anyone who works in the trades, like a carpenter, cement finisher, brick layer, etc. who only get paid when they work!

Paid time off benefits can be packaged in any number of ways.

The traditional benefit model is that employees are allowed a couple of weeks of vacation and a few sick days per year.

There are different models of these benefits – which can be all over the map.

I’ve seen vacation benefits as conservative as one week a year and as generous as twelve weeks per year (after decades of employment).

Some organizations offer no sick time and others allow the employee to accrue hundreds of hours over the course of years of employment to help cover the employee in the case of an extended illness.

Here is my personal case study that will speak to the advantages and disadvantages of paid time off.

I took a job with an organization that had a traditional model of vacation and sick time pay. They allowed employees one week of vacation after one year of employment.

But they also allowed employees one sick day a month – equating to twelve days of sick pay per year. That is more than two weeks of sick time – every year!

I wasn’t with the organization very long before I noticed that employees were calling in sick at an alarming rate.

I had come from an organization with a non-traditional paid time off (PTO) program that was a very different model and employees rarely called in sick.

I got the revelation that the organization was incenting employees to call in sick. Who can wait a whole year for a week off?

This made no sense to me so I began the process to transition the organization from a traditional model of vacation and sick days to a paid time off model which combines holiday, vacation and sick hours into one bank of hours.

Within a year of implementing the new model, employee absenteeism and sick call-ins were reduced by 75%!

So what are the advantages and disadvantages of having a paid time off benefit?

The goal of a paid time off model is to reward employees by offering the flexibility to be paid for days that they do not come to work.

7 Advantages of Paid Time Off

  1. Employees feel valued when they are allowed time off with pay – which contributes to employee engagement and retention.
  2. Employees can use their bank of hours whenever they like (with manager approval) and for whatever reason they choose.
  3. Employees who have paid time off benefits have the advantage of getting refreshed by getting away from the work environment.
  4. Flexible paid time off programs allow employees to choose when to take time off.
  5. When employees have flexibility with time off, they are less likely to call in unexpectedly, allowing for more consistent coverage of responsibilities.
  6. Paid time off benefits is part of a total compensation strategy and can be used to attract “difficult to recruit” employees.
  7. Paid time off benefits make employees feel empowered to make decisions about personal needs.

There Are Also Some Disadvantages to Consider

  • When an employee is not in the office, someone may need to cover their responsibilities and this can be challenging, particularly for smaller organizations with fewer people to draw from.
  • Paid time off programs are an expensive employment benefit which add to total compensation cost.
  • Paid time off benefits need to be managed and employees need to learn to budget their hours so they maintain a bank of hours when needed. I’ve seen people use PTO hours as soon as they accrue only to be without banked hours when a personal emergency arose.

The specific model of a paid time off program can vary greatly. The number of hours allotted, the way hours are accrued (annually or per pay period), capping hours or giving employees the option to sell hours back are all common options as well.

The goal of a paid time off model is to reward employees by offering the flexibility to be paid for days that they do not come to work. When you think about it, that is a pretty awesome benefit!

Keeping track of all the requests and hour balances can get overwhelming, see how GoCo’s Paid Time Off Tracking feature can make it easy.

How does your organization handle paid time away from work?

This article is by Patricia Lotich from thethrivingsmallbusiness.com.

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